How to Work With a Mortgage Company Before Foreclosure

Lenders provide foreclosure alternatives.

Homeowners fall behind on their mortgage payments for many reasons that are not always the homeowner&amp;#039;s fault. Job losses, sickness, injury or divorce all can cause a homeowner to fall behind on a mortgage and face foreclosure. Whatever the reason, is it is always better to stay in communication with the lender than to avoid the phone calls and the letters. Your lender wants to work with you to find a way to make monthly payments again.

1

Contact a HUD-approved housing counseling agency before you contact your servicer, the company to whom you make your payments. HUD approves these nonprofit companies to provide foreclosure avoidance counseling. HUD requires these companies provide this service to homeowners facing foreclosure free of charge. Call HUD at 800-569-4287 to find an approved agency near you.

2

Call your servicer, the company you make your payments to, after discovering your options with the housing counselor. Your options may include a refinance or modification. An option may also be temporary lowering or suspension of the housing payment all together; depending on the reason the late payments are occurring. Talk to your servicer about the options presented by the housing counselor.

3

Fill out the appropriate paperwork and provide the documentation required by the program offered. Permanent modifications will require you to provide income documentation and fill out the federal application for modification. The lender is going to discover the reason for the delinquency and find a way to prevent it in the future to avoid foreclosure. Refinances will require an application be completed, signed and returned to the lender

4

Complete all required steps depending on your options. Modifications require the homeowner complete a trial period at the new payment amount. This new payment will not exceed 31 percent of your gross monthly income. If your program is a refinance, provide all of the required documentation and explanation letters requested in a timely fashion.

Tip

Contact your servicer on a regular basis to ensure that you are meeting all requirements and to inquire about the status of your loan. While these programs are designed to move quickly, the lender may have many loans it is working on, and the process may take several weeks.

Warning

If losing the home is unavoidable, there are options to full foreclosure that the lender can offer. These include short sales, which means selling the home for less than what is owed; deed-in-lieu, where you give the home to the lender prior to being forced to; and some graceful exit plans that may actually allow you to stay in the home for a while after the house is given back. You will pay rent on an affordable basis to the lender for a fixed term so you have an opportunity to find other housing arrangements.

About the Author

David Rouse, currently residing in Raleigh, N.C., has been writing and teaching home owners about the mortgage industry since 1997. Rouse has written training manuals for mortgage professionals and conducted informational first-time home-buyer seminars, providing make-sense answers for a long and confusing process. He studied at Western Kentucky University.

Photo Credits

house image by Cora Reed from <a href='http://www.fotolia.com'>Fotolia.com</a>